The International Monetary Fund (IMF) has predicted that Argentina’s economy will boom in the next two years, forecasting growth of five percent in 2025 and 2026.
Fund technicians, publishing updated forecasts in the IMF’s regular World Economic Outlook report, estimated that Argentina’s economy shrank by 2.8 percent in 2024 – an improvement of 0.2 points on its most recent forecast.
The 2026 forecast is a rise of 0.3 points on previous estimates, underlining the optimism within the multilateral lender for President Javier Milei’s government.
More generally, global growth is expected to increase slightly this year while remaining stuck below its pre-pandemic average, said the IMF in its report, highlighting the growing economic divide between the United States and European countries.
In its flagship report, the IMF said it expects global growth to hit 3.3 percent this year, up 0.1 percentage point from its previous forecast in October, and to remain at 3.3 percent in 2026.
"Growth is steady," IMF chief economist Pierre-Olivier Gourinchas told AFP in an interview, adding that it remained below the average global growth rate in the first two decades of the 21st century of 3.7 percent.
The IMF expects the global inflation rate to continue decelerating, reaching 4.2 percent this year and 3.5 percent in 2026, with prices cooling faster in advanced economies than in emerging markets.
"Among advanced economies, the interesting development here is the strength and resilience and growth of the US economy," Gourinchas said, pointing to the IMF's decision to hike its outlook for US growth to 2.7 percent in 2025 and to 2.1 percent in 2026.
"The labor market has been strong, there is strong demand, private demand is robust, there is good confidence," he said.
One of the risks to the IMF's forecasts is policy uncertainty in the United States, where Donald Trump is preparing to return to the White House.
The IMF did not include the Republican president-elect's policy proposals in its forecasts and instead based its projections on existing US policies.
"The bottom line is, when we look at the risk for the US, we see an upside risk on inflation," he said.
Referencing Argentina, Gourinchas said that the Milei government had “implemented fiscal measures that resulted in a fiscal contraction of around five percent of GDP, and this is one of the main drivers – now we are seeing the economy rebounding.”
He emphasised that the recovery began to be observed in the second half of 2024 and noted that in the third quarter, Argentina saw four percent growth.
Gourinchas also highlighted the “increase in bank credit, and this will help stabilise the Argentine economy."
The official described the reduction in inflation as “an impressive achievement” and revealed that discussions are ongoing on this matter, although he refrained from providing further details.
These figures were published just days before President Javier Milei is set to meet with the head of the organisation, Kristalina Georgieva.
The meeting will take place next Sunday in Washington during the president's trip to the United States to attend Donald Trump's inauguration.
]– TIMES/NA/AFP
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